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CASE NO.: Appeal (civil)  3706 of 1998

PETITIONER: Bareilly Development Authority   

RESPONDENT: Vrinda Gujarati & Ors.  

DATE OF JUDGMENT: 26/02/2004

BENCH: S. Rajendra Babu, Dr. AR. Lakshmanan & G.P. Mathur.

JUDGMENT: JUDGMENT

Dr. AR. Lakshmanan

       This appeal is directed against the judgment and  order  dated 14.5.1996  passed by  the High Court of Judicature at Allahabad    in Civil Misc. Writ Petition No. 36735 of 1995.  The appellant-Bareilly  Development Authority ( hereinafter referred to as  "the BDA") was set  up  by the State of U.P. by Notification  dated 19.4.1977 issued under  Section 3 of the U.P. Urban Planning and Development Act, 1973.   The  BDA issued  an advertisement calling for applicants to apply for  allotment of flats to be constructed by it in the Priyadarshani Nagar  Yojna of Bareilly under the Pushpanjali Scheme and the Kusumanjali  Scheme.  The appellant also issued a Brochure giving the terms and  conditions under which the said applicants could apply for and be  allotted the flats under the said Scheme.  The estimated cost of the  said flats was also given in the said Brochure and it was clearly  mentioned that the final costing will be done later and the costing of  the flats was subject to the right of the appellant to amend the same.   The Brochure also did not contain any prescribed date or time period  for either construction of the flats or the delivery of possession.           The respondents in this appeal applied for allotment of flats in  Kusumanjali Scheme.  As per the Brochure, 52 flats under the Scheme  were to be of 57.10 Sq. Mtrs.  (614.39 Sq. Ft.) and were to cost as  follows:- Ground Floor            -       Rs.2,10,000.00 First Floor             -       Rs.2,00,000.00 Second Floor            -       Rs.1,90,000.00 Third Floor             -       Rs.1,80,000.00         Respondents 1-5 registered themselves for the flats in  Kusumanjali Scheme and also paid the required registration fee.  The  construction of the flats was started and thereafter, there was some  dispute between the BDA and its contractor and the construction was  delayed for nearly one and a half year and finally the construction was  re-started though only two floors instead of original four were built in  the Kusumanjali Scheme and thus only 22 flats were built out of  52  originally intended.  After the draw of lots, the respondents were  issued allotment letters indicating therein in Clause 2 that the price of  the flat was still an estimated one and that the final costing would be  done after completion on the basis of the actual costs and would be   informed thereafter to the allottee which would be payable by them.   Clause 2 of  the Allotment Letter (Annexure-B) reads as under: "The estimated cost of the flat is Rs.2,10,000/-.  The  final cost would be intimated to you on the basis of  actual costing after the completion of the Scheme, which  would be payable by you."                

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A Final Costing Committee was set up by the BDA consisting of  the Secretary, the Chief Accounts Officer and the Executive Engineer  of the BDA and the Committee, after due deliberation, recommended  that  on the basis of the  actual cost of each flat, the price had to be  enhanced (in the case of flats on the ground floor, for example,  increasing from Rs.2,10,000/- to Rs.2,81,100/-).  The Committee also  recommended that the allottees be given additional time to deposit the  enhanced amount of the price as the said allottees had already  deposited their respective quarterly instalments.  It has further  recommended that in case  the allottees fail to deposit the said amount  in the time prescribed, interest  @ 18% be charged from them.  The  respondents were duly informed by individual notices by the appellant  about the final  costing of the said flats and also that they were  required to deposit within 15 days of the receipt of the said notice  the  balance amount  of price  of the flat as well as the proposed lease rent.    The respondents  filed objections to the said increase in price.  The  said representations were rejected by the appellant on  21.10.1993(Annexure-D).  When the flats were ready for delivery of  possession, in view of the reluctance shown by the respondents in  paying the enhanced amount, the BDA offered the option to the  respondents to either file an  undertaking by way of affidavit that they  would pay the enhanced amounts or to take back   their  deposit sums  with interest.  All the respondents filed their undertakings by way of  affidavits dated 19.5.1994 and undertook unconditionally to be bound  by the final costing of the flats by the BDA and also to pay  the  enhanced amount.  The affidavit reads thus:-

AFFIDAVIT

I,  Shrimati Vrinda Gujarati, Wife of Shri B.K. Das, am the  resident of 330, Madhobadi, Bareilly and I hereby on oath state as  following:

1.  That the decision taken in future by the Bareilly Development  Authority regarding the increase in the cost of the Flat No.9-A (Ground  Floor), Kusumanjali  Scheme, Priyadarshani Nagar, Bareilly  allotted to  me would be binding on me.

2.  That the deponent is ready to deposit the entire amount of the  increase in cost.

                                                               Sd/-                     Varinda

       On 19.6.1993 to 13.7.1994, the BDA delivered possession of  the said flats on various dates to the respondents.  The  respondents,  after taking possession of their respective premises and after  filing the  above undertakings once again made representation to the appellant   against  the final  costing  of the said flats.  The BDA, in the meantime,  sent  another  notice  to the respondents to pay the enhanced unpaid   amounts of the costs with 18% interest or else legal action would be  taken against them.  Since the respondents failed to pay the said  amount in spite of  repeated demands, the  BDA initiated recovery  proceedings against the respondents  under the U.P. Zamindari   Abolition and Land Reforms Act, 1950 and recovery certificates  were  issued against the respondents  by the  Tahsildar, Bareilly.  Being  aggrieved, the respondents  filed C.M.W.P. No.36735 of 1995  before  the High Court  of  Judicature at Allahabad  challenging enhancement  in  the  final cost of the flats and praying,  inter alia, that the recovery  proceedings against  the respondents  initiated  by the BDA  for  recovery of the unpaid  amounts  be quashed.  The High Court stayed   the recovery  proceedings provided the respondents deposited

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Rs.45,000/- on or before 31.1.1996.  Before the High Court, the BDA  placed  the  Chart showing  the details of the reasons for enhancement   of  the price.  (Annexure-N).  The High Court by its judgment  and   order dated 14.5.1996 allowed the writ petition  filed by the  respondents herein and issued further directions to the BDA regarding  adjustment  of various amounts against the final price of the flats,  though the High Court did not either strike down the enhanced price or  hold it  illegal.  Aggrieved by the said judgment, the BDA has preferred  this appeal by way of special leave petition. We heard Shri Bharat Sangal, learned senior counsel  appearing for the BDA and Mr. A.K. Sanghi & Mr. Punit  D. Tyagi,  learned counsel appearing for the respondents. Learned counsel appearing for the appellant made the following   submissions: (i)  There has been no application of mind by the High Court to  the terms and conditions of the contract entered into between the BDA  and the respondents and the High Court has ignored totally the law in  regard to such cases as laid down by this Court. (ii)     The High Court failed to appreciate that Clause 2 of the  Brochure of May, 1990 produced by the BDA for the concerned  scheme in which the said respondents applied for and obtained the  concerned flats, clearly provided that the cost of each flat given in the  said Brochure was only an estimated and actual cost would be  intimated later at the time of allotment. (iii)  The High Court failed to appreciate that in Clause 15 of the  Brochure it was clearly stated that the BDA reserves the right to  amend any term or condition of the Scheme till the time of allotment  and such amendment shall be binding on the allottees. (iv)  It was contended that the revised cost of the said flats,  necessitated by   the increase in size of the flat as well as the increase  in each flat’s share in cost of the land due to reduction in number of  flats built, were informed to the respondents, they accepted the  increased cost and also filed undertakings by way of affidavits  affirming their decisions to abide by the increase and pay the required  enhanced amount. (v)  The High Court has failed to appreciate that Clause 13 of  the Brochure only provides that the possession would be given to the  allottee only after the full amount has been deposited and it cannot be  interpreted to mean that the possession would be given immediately  after the allotment is made.  The direction issued by the High Court  regarding the payment of interest by the authority to the respondents is  baseless and issued without any reason. It was submitted that the High Court has erred in holding that  the appellant is not entitled to any interest on the amounts unpaid to it  by the concerned respondents for the period between 20.12.1995,  date of the interim order and 14.5.1996, the date of the final judgment.   In this regard, it was submitted that the High Court has failed to  appreciate that by the interim order dated 20.12.1995, the High Court  had only stayed the recovery proceedings against the said  respondents for non-payment of balance amount, and it cannot be  said that the said order has also stayed the liability of the said  respondents to pay the said amount. It was further submitted that the High Court has not struck  down the enhanced cost announced by the appellant nor has it held  that the appellant is not entitled to recover the unpaid amounts from  the respondents and it has only directed that certain adjustments on  account of interest payable to the respondents and difference in  registration fee be adjusted from the final price. (vi)  The  High Court has failed to appreciate that there was no  challenge made to the terms of the Brochure by the respondents at  any stage and thus there could be no interference with the said terms  and conditions by the High Court and in that regard, the  High Court  has exceeded its jurisdiction by doing so. It was further submitted that the judgment and order of the High  Court is also bad as it has exceeded its jurisdiction by granting

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compensation to the respondents. Per contra, Mr. A.K. Sanghi, learned counsel appearing for the  respondents, submitted that the appellant being a statutory body is  under obligation to provide flats to the respondents,  who belong to the  Middle Income Group and other citizens of a reasonable and just price.   The High Court, therefore, was perfectly justified in law in holding that  the enhancement sought to be recovered from the respondents is  arbitrary and without basis whatsoever. A reading of the terms and conditions of the Brochure would  show that the same were one sided and were rightly held by the High  Court to be unconscionable because the BDA has a duty to construct  and allot flats to the poor citizens who are unable to construct houses  on their own.  It was further contended that the terms and conditions of  the contract as well as the  undertaking given by the respondents are  not voluntary and that the respondents who are weaker sections of the  society were forced to give undertakings which were unforceable. We have gone through the relevant records, the undertakings  and the affidavits given by the respondents and the  Chart of  Escalation and the judgment of the High Court. Before proceeding further, it is beneficial to reproduce the Chart  of Escalation which is as follows: Chart of Escalation 1.  Estimated area                      =       614  Sq.ft. 2.  Finally constructed area            =       702 Sq.ft. 3.  Increase in covered area            =       88 Sq. ft. 4.  Rate of construction per sq. ft.    =       Rs.342/-      (cost of land included)     5.  Increase in construction cost       =       342x88= Rs.30,096/- 6.  Cost of land also increased for       every purchaser as the construction      made was 2 storeyd in place of 4      storeyed  7.  Initially purchaser of ground f       floor had to pay for land                 =       Rs.137/- per Sq. ft.       (This was included in estimated cost of Rs.2,10,000/-) 8.  After final costing cost of land       increased to                       =       Rs.183/- per sq. ft. 9.  Increase in cost of land            =       Rs.46/- per sq. ft. 10.  Total increase in cost of land     =       Rs.32,292/-        for every purchaser of         ground floor                              11.  Increase in cost of other         facilities                               =       Rs.8,500/- such                                             as parking, water, sewer etc. 12.  Total increase                     =       Rs.30,0096+Rs.32.292+                                                 Rs.8,500 = Rs.70,888/-

Details of increased area

1.  One more toilet was constructed. 2.  In place of two common passages, three common passages      were constructed. 3.  Bigger Verandah was made.

Total increase in covered area = 88 Sq. ft.

  It is seen from the above Chart that the finally constructed area  is 702 Sq. ft. and the increase in the covering area is 88 sq. ft.  The  BDA has claimed only the increase in construction cost of 88 sq. ft. @  construction per sq. ft. at Rs. 342/- namely, Rs.342 x 88  = 30,096/-.   According to the BDA, the cost of the land has also increased for every  purchaser as the construction made was two storeyed in place of four  storeyed.  Initially the purchaser of the ground floor had to pay for land  Rs.137/- per sq. ft. which was included in the estimated cost of

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Rs.2,10,000/-.  After final costing, the cost of the land is now increased  to Rs.183/- per sq. ft.   The increase in cost of the land is Rs. 46/- per  sq. ft. and the total increase in the cost of the land for every purchaser  of ground floor is Rs. 32,292/-.  It is also an  admitted fact that the BDA  had provided the other facilities such as parking, water, sewer etc. and  the increase in cost of these facilities is Rs.8,500/-.  Thus the total  increase of construction cost, cost of the land and the other facilities  come to Rs.70,888/-.  The details of the increased area has also been  very clearly spelt out which includes one more toilet, in place of two  common passages, three common passages were constructed and a  bigger Verandah was made and the area covered by these items  comes to 88 sq. ft. We have already referred to the allotment letter, undertaking by  way of affidavit and Chart of Escalation etc. and as per the above  undertaking, the BDA is entitled to collect the enhanced price from the  allottees.  Once the respondents owe money to the appellant, it is fully  in the competence of the Authority to recover the same.  The parties to  this action are bound by the terms of the contract. This Court in its judgment in the case of   Bareilly  Development Authority & Anr.vs. Ajai Pal Singh & Ors. , (1989) 2  SCC 116  has clearly held that the authority or its agent after entering  into the field of ordinary contract acts purely in its executive capacity.   Thereafter, the relations are no longer governed by the constitutional  provisions but by the legally valid contract which determines the rights  and obligations of the parties inter se.  At page 124 of the judgment,  this Court has also held that once the respondents have given their  written consent accepting the changed and varied terms and  conditions, they cannot be permitted to contend that the authority has  gone back on its original terms and conditions  to their detriment.  This  Court further  held that once the respondents have entered into the  realm of concluded contract pure and simple with the authority they  cannot step out of the terms of the contract unless some statute steps  in and confers some special statutory obligations on the authority in  the contractual field.         The above view was endorsed by this Court in its judgment  in  Indore Development Authority  vs.  Sadhana Agarwal (Smt.) &  Ors., (1995) 3 SCC 1.   This Court in paragraph 9 of this judgment held as under: "But taking all facts and circumstances into  consideration, this Court said that it cannot be held that  there was misstatement or incorrect statement or any  fraudulent concealment, in the brochure published by  the Authority.  It was also said that the respondents  cannot be heard to say that the Authority had arbitrarily  and unreasonably changed the terms and conditions of  the brochure to the prejudice of the respondents.  In that  connection, it was pointed out that the most of the  respondents had accepted the changed and varied  terms.  Thereafter they were not justified in seeking any  direction from the Court to allot such flats on the original  terms and conditions."

This Court  further in paragraph 10 of the judgment held as under: "So far the facts of the present case are concerned, it is  an admitted position that in the proforma attached to the  application for registration, the appellant said that the  price mentioned by them was a probable and estimated  cost, the definite price shall be intimated at the time of  the allotment.  Thereafter, the appellant had been  informing the respondents and others who had got  themselves registered, from time to time regarding the  escalation in the cost of the flat.  One of the reasons for  the rise of the price for the LIG  Flat from Rs.60,000 to  Rs.1,16,000 appears to be the increase in are of the flat  itself from 500 ft. to 714.94 Sq. fgt.   From 1982 to 1984,

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possession of the flats could not be delivered because  of the dispute pending in the Court which also  contributed to the increase in the cost of the flat.   Admittedly, the respondents came in possession of the  flats in the year 1984,.  In the facts and circumstances of  the case, we are satisfied that no interference was  called for by the High Court."    

    We are, therefore, of the opinion that only obligation on the BDA  was to provide the houses in question on the contractual price and in  that regard  the judgment of this Court in L.I.C. of India & Anr.vs.  Consumer Education & Research Centre & Ors., (1995) 5 SCC 482  was cited.  The above judgment  has no relevance with the present  case.   It was denied by the BDA that the respondents have paid full  amount towards the cost of the flats as alleged.  The enhancement in  the cost was  due to actual increase in the cost of the flat as detailed in  the chart annexed as Annexure-N which formed  part of the  supplementary affidavit filed before this Court.  Such  enhancement, in  our opinion, was  in accordance with  clauses 2 and 15 of the Brochure  of  May, 1990 and the said enhancement was also  in accordance with   clause 2 of the allotment letters dated 10.12.1991 issued to various  applicants.  The said enhancement was clearly accepted by the  respondents by their various affidavits of undertakings filed on  19.4.1994 and other respective dates before the BDA.  The  respondents after undertaking to pay the enhanced amount and after  taking possession of the flats on that ground cannot be allowed to  raise frivolous contentions to avoid payment to the appellant.   At the time of hearing, this Court on 11.4.1997  passed an  order directing the counsel appearing on behalf of the BDA to find out  whether there is a proposal or likelihood of two more storeyes being  added to the flats  that have been constructed.  Counsel for the BDA  submitted before the Court that the Scheme originally  was to build  four storeyed buildings but now only two storeyed building has been  built.  As a result, the entire cost of the flats has rateably been  distributed among the occupiers of the two storeys building instead of  larger number of occupiers of the four storeys building as was  originally envisaged.  This is another reason for the enhancement in  the cost of the flat.   This Court in the case of Delhi Development Authority vs.  Pushpendra Kumar Jain, 1994 Supp(3) SCC 494,  which was cited  before the High Court,  has misinterpreted the said decision.  In that  case in paragraph 7 at page 497  of the judgment, this Court held that  there was no material  produced  before any Court  in the said matter  to show that there was any delay in allotment of the flats in the said  case due to inefficiency on the part of the authority and further that as  there was no period prescribed  in the Scheme for the allotment hence  it could not be said that there was any inordinate delay.  In the present case also,  there was no period prescribed for  allotment  and in any case, the flats in question were allotted within  two years from the issuance of the Brochure and there cannot be said  to be any inordinate delay. The High Court also has not given any finding that the final  costing of the flats concerned was wrong or unreasonable.  The High  Court has only held that there is unreasonable delay in delivery of  possession and hence, directed to pay the interest @ 18% for  the  delayed period from the date of the allotment to the date of the  delivery of the possession.   The BDA Housing Scheme provides that no interest is payable  on instalments under Self Financing Scheme.  However, the Scheme  provides that if the amounts payable to the BDA are not paid within the  prescribed time limit, penal interest at the rate of 18% per annum shall  be payable along with payable amounts.  At the time of hearing, learned counsel made  an appeal  to the  Court to reduce the rate of interest from 18% to 6% on the ground that

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the allottees under the Scheme in question belonged to Middle Income  Group and, therefore, they would not be in a position to pay the  interest.  In our view,  once the liability of the respondents to pay the  balance amount remaining unpaid out of the final cost of the flat is not  struck down and remains in existence, the appellant cannot be asked  to forego the interest for the period, or any part thereof, for which the  said amounts remain unpaid.  The High Court is not right in creating  double jeopardy for the BDA directing it to pay interest to the  respondents while at the same time to direct the respondents not to  pay interest on the unpaid amounts.   However, taking note of the  financial status of the respondents and in the peculiar facts and  circumstances of the case, we direct the respondents to pay simple  interest @ 9%   on the enhanced price of the flats.  The enhanced  price of the flats shall be paid in six monthly equal instalments together  with accrued interest payable on diminishing balance on or before the  10th of every succeeding month commencing from April 2004.    If the  respondents commit any two defaults in the payment of instalments on  the enhance price, the interest @ 18% shall be recovered from them  by the BDA.   The amounts deposited by the respondents as per the  interim order, if any, will be given credit to.  According to the Brochure,  the Housing Scheme is a Self Financing Scheme wherein the allottees  were to pay the cost of the flats in quarterly instalments.  The parties  are bound by the terms of the contract in regard to the payment of the  original cost of the flats as per the agreement.   For the foregoing reasons, the present appeal filed by the BDA  deserves to be allowed.  The judgment and order of the High Court  dated 14.5.1996 in CMWP No. 36735/95 is set aside.  But however,  we make no order as to costs.